Sweeney aims to be BIAM's Mr Turnaround

Fri, Aug 4, 2006, 01:00

Chief executive of Bank of Ireland's asset management business hopes to reverse its fortunes and oversee funds worth €57 billion in five years time, writes Una McCaffrey

Mick Sweeney says he has never worked so hard in his life. These days, it is one 12 or 13-hour day after another, with more work brought home for after-hours perusal. He will be hoping, along with Bank of Ireland's board, its shareholders and the clients of Bank of Ireland Asset Management (BIAM), that all the effort will be worth it.

Sweeney, an ebullient Corkman, took on the top job at BIAM at the start of April, just as some thought it couldn't get any worse for what had become known as Bank of Ireland's most troubled division.

Over the previous two years or so, it seemed like BIAM had been haemorrhaging business. Assets under management had fallen from €57 billion to (at the most recent count) €42 billion. Linked directly to this was a downturn in performance, with BIAM falling behind its peers since 2004.

Soon after these returns started to worsen, the bad vibes were compounded by the departure of no fewer than four top staff. The team left en masse to set up a rival funds business in Dublin for Australian financial house Perpetual.

This left Chris Reilly, the grand old man of Irish fund management and BIAM's chief investment officer, with renewed pressures and responsibility at a time when he should have been preparing for retirement.

While the division was able to make some internal promotions to pick up the slack, it was clear that Reilly's official retirement date of 2007 would create more problems. There was also the small matter of strategy and the recognition that BIAM's existing course was not providing the required results.

In the year to March 31st, BIAM (once a cash cow for the group) produced a pretax profit of €85 million, compared to €125 million a year earlier. Something had to be done, and quickly.

Enter Mick Sweeney, Mr Turnaround, to perform his fantastic rescue trick. Sweeney, who has the air of a man running quickly towards the top at Bank of Ireland, admits he didn't go looking for the BIAM job. "But at the same time, when it was put to me, it most certainly was a challenge and an opportunity that I welcomed and relished," he says.

When approached with the potentially poisoned BIAM chalice, Sweeney was doing very nicely thank you as chief executive of Bank of Ireland Global Markets. He had been in that position for three years, and was running a €100 billion book for the bank. He also oversaw the launch of a €1 billion mortgage-covered securities programme, the first of its kind in the Republic.

Despite seeing BIAM as part of the same markets "football pitch", Sweeney acknowledges that his current challenge is bigger than that provided by his previous job. For one thing, Global Markets was generating a compound annual growth rate of 20 per cent, while BIAM was "clearly on a different trajectory".

"I would have had to think about it, but not for too long," says Sweeney of his decision-making process.

Once in situ, the hard work of finding a replacement for Reilly and a new growth path began.

Sweeney says he looked at all the best and most progressive international performers (players such as Wellington and Henderson) to see how they were doing things. On considered reflection, he decided things needed to change at home.

The culmination of this shift became apparent just over a week ago, when Sweeney unveiled his new top team for BIAM.

Chris Johns, an investment strategist with Collins Stewart and former columnist at this newspaper, will head up global research, while Paul Boyne, a BIAM man already, will be managing director of global equities. Finally, Seán Crowe will direct fixed income and specialist products. Four more top hires are expected within the year.

To an extent, Sweeney goes along with the now-popular, half-serious line that it has taken three people to replace Reilly, but he says the new structure represents a departure too. While the unit's philosophy of bottom-up, value-led investing remains in place, some serious tweaks have been made.

Sweeney has broken the business into the constituent parts that are reflected in the titles given to Johns, Boyne and Crowe. He says there were too many parts for one single chief investment officer to put his or her "arms around the whole thing".

Investment offerings will now be more specialised, including sophisticated global equity products, fixed-income products, property funds and index funds. Finally, research will be at the centre of it all.

Sweeney says it is a matter of putting in place an "evolutionary, not big bang" shift, which will bring both accelerated performance for existing clients and future growth.

Like all good leaders, he has adopted targets, or more specifically, a 12-month plan, a three-year plan and (you've guessed it) a five-year plan.

In the short-term, performance must be turned around, with customers clearly seeing where BIAM is adding value. On a three-year horizon, assets under management should have grown and BIAM must be in the top quartile around the world for specialist products.

After five years, Sweeney wants to be back at the €57 billion under management mark, with 40 per cent of this to be drawn from non-equity products. At the moment, the unit's assets are 80 per cent in equities.

He also wants to make the business more international again. At the moment, just 20 per cent of activity stems from abroad, whereas it was previously 60 per cent. Sweeney wants it to be back at 40 per cent within three to five years and to be split evenly thereafter. The US, Australia and Japan are his big foreign targets.

The main barrier, outside performance, in getting back to Sweeney's future will be in convincing the international universe of fund management consultants that BIAM is in tip-top shape again.

These consultants are the gatekeepers of new mandates, the people who advise potential clients on who should manage their money. They are also the people who would have influenced many decisions to withdraw mandates over the past couple of years.

Sweeney's job now is to keep in touch with such consultants, as well as keeping in contact with potential clients, so that every positive business development is noted. Then, maybe after three or five years, the big bucks might start to flow back in.

In the short term, there are some encouraging signs. BIAM, by far the biggest domestic manager, has won €300 million in 12 new domestic mandates over the past three months. An international client has also given the division some additional cash to manage.

Sweeney talks a lot about giving existing clients "the performance they deserve", thus offering reassurance to loyal customers who might worry about being forgotten in the new drive for expansion.

He is also more than aware of the load that has been placed on his shoulders by his superiors. It can't help on the pressure front, for example, that group chief executive Brian Goggin used to head BIAM and thus knows the business inside out.

Sweeney jokes that he is so committed to the new job that he has signed a "200-year contract". In reality, five years is clearly the more important horizon.

Perhaps optimistically, he says BIAM has "no Everest to climb" in the meantime.

FactFile

Name: Mick Sweeney

Position: Chief executive, Bank of Ireland Asset Management (BIAM).

Career: Left UCC in 1979, a month into a B Comm, to take up job in registration and securities at Bank of Ireland. The UCC Dean advised him to do so and to continue his B Comm at night, which he did. In 1987, he joined B of I's Capital Markets, working in New York and London. Before taking up his current job in April, he was chief executive at Global Markets for three years.

Age: 45.

Family: Partner, Áine.

Hobbies: Running marathons, but he no longer has the time.

Why is he in the news? BIAM has just unveiled a new structure designed to stem an outflow in funds under management and to bring in business.